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SEC filingNVIDIA reported strong Q3 FY26 results with revenue up 62% YoY to $57.0B, driven by Data Center compute and networking platforms.
NVIDIA delivered robust results for the third quarter of fiscal year 2026, with revenue reaching $57.0 billion, up 62% year-over-year and 22% sequentially. The growth was fueled by strong demand for Data Center compute and networking platforms, particularly the Blackwell Ultra architecture, which became the leading architecture across all customer categories. Gross margin of 73.4% decreased 1.2 percentage points from 74.6% a year ago, reflecting the transition from Hopper HGX systems to Blackwell full-scale datacenter solutions, but improved 1.0 point sequentially as Blackwell ramped with a better mix and cost structure. Operating expenses increased 36% YoY to $5.8 billion, driven by compute and infrastructure costs, higher compensation and benefits, and engineering development costs. Operating income rose 65% to $36.0 billion, yielding an operating margin of 63.1%, up 80 bps from 62.3% a year ago. Net income grew 65% to $31.9 billion, and diluted earnings per share of $1.30 increased 67% from $0.78 in the prior year period. Other income, net benefited from unrealized gains in equity securities. The effective tax rate rose to 15.9% from 13.5% due to a lower percentage of tax benefits relative to higher income.
Revenue by segment reflects the dominance of Data Center. Compute & Networking segment revenue increased 64% YoY to $50.9 billion, driven by Data Center computing (up 59% year-on-year for the first nine months) and networking (up 105% year-on-year for nine months). Blackwell computing platforms and NVLink compute fabric for GB200 and GB300 systems were key drivers. Graphics segment revenue grew 51% YoY to $6.1 billion, propelled by Blackwell architecture sales across Gaming, Professional Visualization, and Automotive. Operating income for Compute & Networking rose 62% to $35.7 billion, while Graphics operating income increased 70% to $2.5 billion. The Compute & Networking operating margin was approximately 70%, and Graphics margin was about 42%.
Management highlighted several forward-looking themes. The Blackwell architecture cadence remains on a one-year product cycle, with Blackwell Ultra platforms now shipping. However, the company noted potential challenges: data center infrastructure availability (energy, capital) could impact customer deployments; export controls on H20 and the AI Diffusion IFR replacement rule pose uncertainties; and macroeconomic factors such as tariffs and supply chain disruptions may affect costs. NVIDIA is increasing U.S.-based manufacturing to enhance supply chain resilience. While no specific revenue or margin guidance was provided for Q4 FY26, the company expressed confidence in continued growth from accelerated computing and AI. Key strategic investments include a $5 billion commitment to Intel and up to $10 billion in Anthropic, subject to regulatory approvals. Liquidity remains strong with $60.6 billion in cash and marketable securities, supporting share repurchases ($36.7 billion year-to-date) and dividends.
As of October 26, 2025, NVIDIA held $11.5B in cash and cash equivalents and $49.1B in marketable securities, totaling $60.6B in liquidity. Total debt stood at $8.5B (including $1.0B short-term), resulting in a net cash position of $52.1B. Shareholders' equity increased to $118.9B from $79.3B at fiscal year-end 2025, driven by $77.1B net income and $36.7B in share repurchases. Inventory surged to $19.8B from $10.1B, reflecting product buildout for Data Center demand. Deferred revenue rose to $2.4B, with $2.5B in remaining performance obligations from contracts over one year.
Total purchase commitments reached $84.9B, comprising $50.3B in manufacturing production and supply (substantially paid by FY2027), $26.0B in multi-year cloud service agreements (spread through FY2031+), $6.5B in investment commitments (including $5B in Intel), and $2.1B in other commitments. Additionally, operating lease obligations totaled $2.9B, with $7.5B in future lease commitments expected for data centers. A facility lease guarantee of $860M was also noted.
NVIDIA returned $36.7B to shareholders via share repurchases (262M shares) in the first nine months of FY2026. The Board authorized an additional $60.0B in buybacks on August 26, 2025, leaving $62.2B available. Dividends totaled $732M ($0.01 per share quarterly), up 24% YoY. Debt remained stable with no issuance or repayment; total debt of $8.5B includes $1.0B current portion. Capital expenditures were $4.8B (3.2% of sales), primarily for property and equipment.
Compute & Networking segment generated $50.9B revenue (89% of total) and $35.7B operating income, with a 70.2% margin. Graphics segment contributed $6.1B revenue and $2.5B operating income (41.8% margin). Revenue by end market: Data Center $51.2B, Gaming $4.3B, Professional Visualization $0.8B, Automotive $0.6B, OEM & Other $0.2B. Geographically, U.S. customers accounted for 69% of Q3 revenue, Taiwan 24%, China 5%, and other 2%. Four direct customers each exceeded 10% of total revenue, all in Compute & Networking.
NVIDIA's operating cash flow (CFO) of $66.5B for the nine months ended October 26, 2025 represents a robust 40% increase year-over-year, significantly outpacing net income growth. The cash conversion rate (CFO/Net Income) is 86%, reflecting high earnings quality despite substantial working capital investments. Accounts receivable increased $10.3B and inventories $9.7B, indicating strong demand but tying up cash. Deferred income taxes provided a $2.0B benefit. Capex intensity rose to $4.8B (7.2% of CFO), up from $2.2B in the prior period, as NVIDIA invests in infrastructure. Free cash flow (not explicitly stated) is approximated by CFO less capex, implying ~$61.7B, which comfortably covers capital returns ($36.3B share repurchases and $0.7B dividends). The company is effectively returning capital to shareholders while still funding growth.